Monday, October 15, 2007

Sucker's bet

In addition to Ms. Brown at Goldman Sachs, Lehman Brothers has hired Bradley Tusk, who first pushed leasing the Illinois state lottery as deputy governor there, to sell other states on the privatization idea. In Massachusetts, Mr. Tusk’s efforts are being aided by William F. Weld, who served as governor there from 1991 to 1997.

“I’ve been out of office for 10 years, and I’m working with Massachusetts and a number of other states on the potential for monetizing various public assets including lotteries,” Mr. Weld says. “If the states can make more money for education or other causes by having a private company operate the lottery, there’s no harm done.”

Want to buy a used lottery from this man?

If the idea of casino gambling -- particularly on the final approach to one of the world's top 40 busiest airports as being touted by Mayor for Life Menino -- is risky business, what about selling the lottery to private investors?

But that isn't stopping Big Red and his band of crusaders from foisting this horrible idea on states desperate for cash.

The idea is very familiar in a way. A target, state officials looking for cash to pay some bills, is lined up for the score. Take the chance by selling or leasing a major asset for a big single payday and all your troubles will be over.

(By the way, that's my biggest concern over gambling -- that it feeds on those looking for easy solutions to complex problems. The rest of the issues, such as addiction and crime need to be seriously addressed but this one doesn't strike me as having a solution).

The numbers being tossed around by the Wall Street sharks, er, representatives are staggering. California could be looking at a $37 BILLION windfall. The masters (and mistresses) of the universe would also make out well, according to the Times, upwards of $250 million in fees.

And how would these noble firms out to help the public pay its bills get the all-imp0rtant return on investment? Lure even more folks to play games with odds ranging up to one in 175.7 million. The odds of winning the slots are apparently all in the computer chip's brain but it's hard to fathom that it is worse than Powerball and Mega Millions.

Given the Massachusetts lottery's spectacular success -- it generates sales of $4.5 billion a year, the highest per capita in the country, and has the nation's lowest administrative costs -- it would be difficult for a private firm to match its performance, officials said.

Yes, as Tim Cahill has frequently noted, the Massachusetts lottery is a "mature asset," and it is more likely to continue shrinking than experience staggering growth. But at least it is a solid source of revenue for cities and towns.